Page 54 - Workbook1E

#2
Three Parts
Your Creditor Summary Sheet is designed in three parts:
PART I—Steps 1 through 5—help you “Summarize Your Total Debt.”
PART II—Steps 5 and 6—help you utilize the powerful principle of “Debt Rollup.”
PART III—Steps 8 and 9—help you reduce your debt as efficiently and quickly as possible using the remarkable principle of “Power Payment” and Debt Rollup together. Once you’ve reviewed these steps, you can follow along with Erik and Tracy on their Sample Creditor Summary Sheet at the end of this section for a step-by-step example of how to complete your form.
PART I— Summarize Your Total Debt
Review steps 1 through 5 on completing the first part of Your Creditor Summary Sheet.
Note: To calculate the number of remaining payments for each of
your debts, you’ll need to use a financial calculator and follow its instructions for determining payments with compound interest using the amortization feature.
1. Identify and List Your Creditors individually in order of the fewest payments needed to pay each off, down to the creditor with the highest number of payments required for payoff (see Step 3.)
2. List the Current Debt Balance, Interest Rate, and current Minimum Monthly Payment for each creditor.
3. Determine and list the number of monthly Remaining Payments for each creditor using your calculator.
4. Calculate your amount of Real Debt by multiplying the Minimum Monthly Payment by the Remaining Payments required to pay off each debt.
5. Total columns to determine your:
Total Current Debt
Total Monthly Payments Total Real Debt
Then calculate the Total Interest You Will Pay (Total Real Debt minus Current Debt Balance.) Insert the Total Number of Months to Pay Off all Your Debts using the Remaining Payments amount of your biggest debt. Also using that amount, calculate the length of time in years and months required to pay off your debts by dividing it by 12. Then you can easily determine Your Initial DEBT-FREE Day.
50 Workbook 1: Building a Spending Plan that Works